Royalty Relief for Deepwater Outer Continental Shelf (OCS) Oil and Gas Leases-Conforming Regulations to Court Decision, 72652-72657 [07-6161]
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PART 280—PROSPECTING FOR
MINERALS OTHER THAN OIL, GAS,
AND SULPHUR ON THE OUTER
CONTINENTAL SHELF
PART 290—APPEAL PROCEDURES
10. The authority citation for part 280
is revised to read as follows:
Authority: 31 U.S.C. 9701, 43 U.S.C. 1334.
11. Section 280.12(a) is revised to
read as follows:
14. The authority citation for part 290
continues to read as follows:
Authority: 5 U.S.C. 301; 25 U.S.C. 396,
2107; 30 U.S.C. 189, 359, 1023, 1701 et seq.,
1751(a); 31 U.S.C. 3716, 9701; and 43 U.S.C.
1334.
15. Section 290.4(b) is revised to read
as follows:
§ 280.12 What must I include in my
application or notification?
§ 290.4
How do I file an appeal?
(a) Permits. You must submit to the
Regional Director a signed original and
three copies of the permit application
form (Form MMS–134) at least 30 days
before the startup date for activities in
the permit area. If unusual
circumstances prevent you from
meeting this deadline, you must
immediately contact the Regional
Director to arrange an acceptable
deadline. The form includes names of
persons, type, location, purpose, and
dates of activity, as well as
environmental and other information. A
nonrefundable service fee of $1,900
must be paid electronically through
Pay.Gov at: https://www.pay.gov/
paygov/, and you must include a copy
of the Pay.Gov confirmation receipt
page with your application.
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PART 281—LEASING OF MINERALS
OTHER THAN OIL, GAS, AND
SULPHUR IN THE OUTER
CONTINENTAL SHELF
RIN 1010–AD29
Authority: 43 U.S.C. 1334.
13. Section 281.41(a)(2) is revised to
read as follows:
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§ 281.41 Requirements for filing for
transfers.
(a) * * *
(2) An application for approval of any
instrument required to be filed shall not
be accepted unless a nonrefundable fee
of $50 is paid electronically through
Pay.Gov at: https://www.pay.gov/
paygov/ and a copy of the Pay.Gov
confirmation receipt page is included
with your application. For any
document you are not required to file by
these regulations but which you submit
for record purposes, you must also pay
electronically through Pay.Gov the
service fee listed in § 256.63 (Nonrequired Document Filing Fee) per lease
affected, and you must include a copy
of the Pay.Gov confirmation receipt
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[FR Doc. 07–6173 Filed 12–20–07; 8:45 am]
BILLING CODE 4310–MR–P
DEPARTMENT OF THE INTERIOR
Minerals Management Service
Background
30 CFR Parts 203 and 260
[Docket ID: MMS–2007–OMM–0074]
12. The authority citation for part 281
is revised to read as follows:
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(b) A nonrefundable processing fee of
$150.00 paid with the Notice of Appeal.
(1) You must pay electronically
through Pay.Gov at: https://
www.pay.gov/paygov/, and you must
include a copy of the Pay.Gov
confirmation receipt page with your
Notice of Appeal.
(2) You cannot extend the 60-day
period for payment of the processing
fee.
the following methods. Please use the
Regulation Identifier Number (RIN)
1010–AD29 as an identifier in your
message. See also Public Availability of
Comments under Procedural Matters.
• Federal eRulemaking Portal: https://
www.regulations.gov. Select ‘‘Minerals
Management Service’’ from the agency
drop-down menu, then click ‘‘submit.’’
In the Docket ID column, select MMS–
2007–OMM–0074 to submit public
comments and to view supporting and
related materials available for this
rulemaking. Information on using
Regulations.gov, including instructions
for accessing documents, submitting
comments, and viewing the docket after
the close of the comment period, is
available through the site’s ‘‘User Tips’’
link. The MMS will post all comments.
• Mail or hand-carry comments to the
Department of the Interior; Minerals
Management Service; Attention:
Regulations and Standards Branch
(RSB); 381 Elden Street, MS–4024;
Herndon, Virginia 20170–4817. Please
reference ‘‘Royalty Relief for Deepwater
OCS Oil and Gas Leases—Conforming
Regulations to Court Decision, 1010–
AD29’’ in your comments and include
your name and return address.
FOR FURTHER INFORMATION CONTACT:
Marshall Rose, Chief, Economics
Division, at (703) 787–1536.
SUPPLEMENTARY INFORMATION:
Royalty Relief for Deepwater Outer
Continental Shelf (OCS) Oil and Gas
Leases—Conforming Regulations to
Court Decision
Minerals Management Service
(MMS), Interior.
ACTION: Proposed rule.
AGENCY:
SUMMARY: This proposed rule would
amend 30 CFR parts 260 and 203 to
conform the regulations to the decision
of the United States Court of Appeals for
the Fifth Circuit in Santa Fe Snyder
Corp., et al. v. Norton (the Decision).
That decision found that certain
provisions of the MMS regulations
interpreting section 304 of the Deep
Water Royalty Relief Act are contrary to
the requirements of the statute.
DATES: Submit comments by February
19, 2008. The MMS may not fully
consider comments received after this
date.
You may submit comments
on the proposed rulemaking by any of
ADDRESSES:
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On November 28, 1995, President
Clinton signed Public Law 104–58,
which included the Deep Water Royalty
Relief Act (Act). The Act was designed
to encourage development of new
supplies of energy. It included
incentives to promote investment in a
particularly high-cost, high-risk area,
the deep waters of the Gulf of Mexico.
These deep Gulf of Mexico waters were
viewed as having potential for large oil
and gas discoveries, but technological
advances and multi-billion dollar
investments would be needed to realize
that potential. Since the enactment of
the incentive, the deep waters of the
Gulf of Mexico have become one of the
most important sources of domestic oil
and gas production.
The Secretary was required to
suspend royalties for certain volumes of
production on all leases in more than
200 meters of water in the central and
western Gulf of Mexico issued in the
first 5 years following enactment of the
Act. These royalty suspension volumes
(RSVs) (i.e., specified volumes of
royalty-free production) ranged from
17.5 million to 87.5 million barrels of
oil equivalent, depending on water
depth. The royalty suspension incentive
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was intended to provide companies that
undertook these investments specific
volumes of royalty-free production to
help recover a portion of their capital
costs before starting to pay royalties.
Once the specified volume has been
produced, royalties become due on all
additional production. This was not a
matter of agency discretion.
We published an advance notice of
proposed rulemaking (ANPR) in the
Federal Register on February 23, 1996
(61 FR 6958), and informed the public
of our intent to develop comprehensive
regulations implementing the Act. The
ANPR sought comments and
recommendations to assist us in that
process. We continued to collect
comments and conducted a public
meeting in New Orleans on March 12–
13, 1996, about the matters the ANPR
addressed. We published an interim
rule on March 25, 1996 (effective 30
days later). We invited comments on the
interim rule, and stated that we would
consider them as part of our review of
responses to the ANPR mentioned
above. We further stated that based on
comments received and experience
gained, we may include changes to the
matters the interim rule addresses in a
comprehensive rulemaking
implementing the Act.
Section 304 of the Act specifies RSVs
for offshore oil and gas leases in three
defined water depth ranges deeper than
200 meters of water issued in lease sales
held in the first 5 years after the Act’s
enactment on November 28, 1995. We
stated in our March 25, 1996, interim
rule entitled Deepwater Royalty Relief
for New Leases that ‘‘[s]ection 304 of the
Act does not provide specific guidance
on how to apply the royalty suspension
volumes to leases issued during sales
after November 28, 1995’’ and that
‘‘[t]he primary question is how to apply
the minimum royalty suspension
volumes laid out in the statute’’ (61 FR
12023). We published a final rule
implementing section 304 of the Act in
the Federal Register, with no
substantive change in the regulatory
language, on January 16, 1998 (63 FR
2626), that became effective on February
17, 1998.
On October 4, 2004, the U.S. Court of
Appeals for the Fifth Circuit in Santa Fe
Snyder Corp., et al. v. Norton, 385 F.3d
884, agreed with the conclusion of the
U.S. District Court for the Western
District of Louisiana that the regulations
implementing royalty relief under
section 304 are inconsistent with the
statute. The regulations provided that
leases issued under section 304 that are
assigned to a field with a current lease
that produced before November 28,
1995, are not eligible for royalty relief.
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The regulations further provided that
where there is more than one section
304 lease in a field, leases share in the
statutory RSV. These requirements were
promulgated in the interim rule
effective on April 24, 1996 (61 FR
12022).
The effect of the court’s ruling in
Santa Fe Snyder was that: (1) The MMS
could not condition royalty relief under
section 304 on the lease being part of a
field that was not producing before
November 28, 1995; and (2) the RSVs
prescribed in section 304 apply to each
lease, not jointly to all leases in a
particular field. An information to
lessees (ITL) dated August 8, 2005,
alerted affected lessees that we would
respect the decision and revise the
regulations to conform to this decision,
resulting in this proposed rule.
Regulatory Change
This proposed rule would revise 30
CFR part 260, which pertains to OCS
leasing, and 30 CFR part 203, which
pertains to royalty relief, to treat leases
issued under section 304 (referred to in
our regulations as ‘‘eligible leases’’) in a
manner consistent with the Santa Fe
Snyder ruling. These proposed revisions
conform our regulations to the court
ruling and are non-discretionary. The
revisions to the regulations in part 260
would modify § 260.3 relating to MMS’s
authority to collect information and
remove references in § 260.113(a) to
prior production on the field to which
a lease is assigned. Deletions in
§ 260.114 would remove paragraphs on
procedures for notification,
determination of RSVs, and having more
than one RSV on a lease because they
would no longer be required. Section
260.114(b) would also be revised to
change the reference to ‘‘fields’’ to a
reference to ‘‘each eligible lease.’’
Section 260.124 would be revised to
remove a reference to eligible leases
establishing an RSV for a field, which is
not valid under section 304 of the Act,
as interpreted in Santa Fe Snyder. Thus,
royalty-free production from an RS lease
only counts against the royalty
suspension volume of a field if that
volume was established as a result of an
approved application for royalty relief
for a pre-Act lease under part 203.
Finally, all of § 260.117 would be
eliminated, because provisions for
allocation of royalty suspension
volumes among multiple leases on a
field would no longer be needed.
Changes in 30 CFR part 203 would
delete references to ‘‘eligible leases’’ in
§ 203.69 and would change the sharing
rule in § 203.71 for purposes of
consistency. It would remove the
eligible leases from the section that
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discusses how to allocate RSVs on a
field. Those changes mean that
regardless of the outcome of an
application for royalty relief for leases
issued either before or after the 5-year
period covered by section 304, which
may affect the field to which they are
assigned, both eligible leases and leases
issued in sales held after November 25,
2000 (referred to in the regulation as
‘‘Royalty Suspension’’ (RS) leases),
would get the full RSVs stated in the
lease instrument. Further, as with an RS
lease, production from an eligible lease
would count against any RSVs available
to pre-Act leases on a field to which the
eligible lease or RS lease has been
assigned. However, unlike RS leases,
lessees of eligible leases may not initiate
an application seeking, or requesting a
share in, an additional RSV granted to
an RS lease. This is because there would
now be more than enough financial
incentive for any single lease.
Retroactive Effect
As explained above, the need for the
change in this proposed rule arises from
the Fifth Circuit’s decision. The effect of
the Fifth Circuit’s decision was to
declare void the relevant regulatory
provisions that the court found to be
inconsistent with section 304. Because
section 304 had not changed, the
necessary implication is that the
relevant regulations were unlawful from
their inception. The Fifth Circuit
decision thus has created a regulatory
void between the date on which the
interim rule became effective (April 24,
1996) and the present. The Fifth Circuit
plainly would apply its interpretation of
section 304 for all time periods, not just
the period after the decision. This
proposed rule does nothing more than
conform the regulations to the Fifth
Circuit’s decision, and reflects the legal
interpretation of section 304 that the
Fifth Circuit would apply. It is therefore
permissible to replace the rule that the
court struck down with this rule for the
time period that the invalidated
provisions covered, so as to avoid
having a gap and consequent ambiguity
in the rule between April 24, 1996, and
the date of this rule. See, Citizens to
Save Spencer County v. EPA, 600 F.2d
844, 879–880 (DC Cir. 1979); Beverly
Hospital v. Bowen, 872 F.2d 483, 485–
486 (DC Cir. 1989). Therefore, this
proposed rule will be effective
immediately upon being published as a
final rule with retroactive effect to April
24, 1996.
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Procedural Matters
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Public Availability of Comments
Before including your address, phone
number, email address, or other
personal identifying information in your
comment, you should be aware that
your entire comment—including your
personal identifying information—may
be made publicly available at any time.
While you can ask us in your comment
to withhold your personal identifying
information from public review, we
cannot guarantee that we will be able to
do so.
Regulatory Planning and Review
(Executive Order (E.O.) 12866)
This proposed rule is not a significant
rule as determined by the Office of
Management and Budget (OMB) and is
not subject to review under E.O. 12866.
(1) This proposed rule would conform
the regulations with the Fifth Circuit’s
decision. It would have an annual effect
on the economy of $100 million or
more.
The Fifth Circuit’s decision means
that more production on many section
304 leases will be subject to royalty
relief than under current regulations,
resulting in larger fiscal costs to the
federal government. The magnitudes of
these fiscal losses (on past and future
royalty collections) would vary
significantly depending upon whether
the federal government ultimately
prevails (low case) or does not prevail
(high case) in pending litigation over the
MMS authority to condition royalty
relief on price thresholds (see Kerr
McGee Oil and Gas Corp. v. Allred
Docket No. 2:06 CV 0439). In the low
case, only deepwater leases issued in
1998 and 1999 likely would be affected,
because those leases were not issued
with price thresholds, and for the other
DWRRA leases, market prices most
likely will exceed threshold levels,
thereby eliminating future royalty relief
on these other deepwater leases. In the
high case, all deepwater leases issued
throughout the 1996 to 2000 period
would be affected, because deepwater
leases issued in 1996, 1997, and 2000
then would be treated similar to
deepwater leases issued in 1998 and
1999 with respect to price thresholds.
For section 304 leases placed on fields
by MMS that consist of one or more
leases which produced prior to the
DWRRA, we projected that from 2000
through 2024, production of oil and gas
could range from 4 million barrels of oil
equivalent (BOE) in the low case to 27
million BOE in the high case. The total
royalty losses during this 25-year period
are estimated to range from $16 million
in the low case to almost $205 million
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in the high case (expressed in current
year dollars). Applying discount rates of
3 and 7 percent to the potential cash
flows, the range of fiscal losses becomes
$17–192 million at 3 percent and $20–
189 million at 7 percent (the lower
bound figures increase as the discount
rate rises because all of the losses in this
case, associated with leases issued in
1998 and 1999, represent historical
royalties that must be paid back to the
lessees).
The Fifth Circuit Court’s ruling also
means that the suspension volumes
cited in the DWRRA must apply to each
lease, not shared by all leases on a
geologic field, as MMS interpreted the
Act. Thus, the added production from a
field that could be eligible for royalty
relief consists of production from all the
leases on the field in excess of the single
royalty suspension volume cited in the
Act (for the applicable water depth), up
to an amount equal to that suspension
volume times the number of leases
included in the field. In fact, the vast
majority of the royalty losses from
section 304 leases will occur as a result
of this aspect of the court’s ruling. We
estimate the additional production that
will be subject to royalty relief from this
‘‘lease-based’’ court interpretation will
be about 400 million BOE in the 20-year
period from 2007 through 2026 in the
low case (covering only DWRRA leases
issued in 1998 and 1999), and
approximately 1.3 billion BOE in the 28year period from 2007 through 2034 in
the high case (covering all DWRRA
leases). The royalty costs associated
with these production levels during the
time periods of production are
estimated to be $3 billion in the low
case and $10 billion in the high case
(expressed in current year dollars).
Discounting at 3 and 7 percent yields
ranges of royalty losses of $2.5–7.5
billion at 3 percent and $1.9–5.2 billion
at 7 percent.
Thus, almost all of the fiscal costs of
the Fifth Circuit Court’s ruling in Santa
Fe Snyder can be attributed to the
expansion of designated amounts of
royalty relief from geologic fields to
individual leases. The total royalty costs
of the court’s ruling, spanning the 35year period from 2000 through 2034, are
estimated to be between $3.1 and $10.3
billion (expressed in current year
dollars).
(2) This proposed rule would not
create a serious inconsistency or
otherwise interfere with an action taken
or planned by another agency because
royalty relief is confined to leasing in
Federal offshore waters that lie outside
the coastal jurisdiction of state and
other local agencies. Careful review of
the lease sale notices, along with
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stringent leasing policies now in force,
ensure that the Federal OCS leasing
program, of which royalty relief is only
a component, does not conflict with the
work of other Federal agencies.
(3) This proposed rule would not alter
the budgetary effects of entitlements,
grants, user fees, or loan programs or the
rights or obligations of their recipients.
(4) This proposed rule would not raise
novel legal or policy issues.
Regulatory Flexibility Act
The Department of the Interior
certifies that this proposed rule would
not have a significant economic effect
on a substantial number of small entities
under the Regulatory Flexibility Act (5
U.S.C. 601, et seq.).
This proposed rule conforms the
regulations to the Fifth Circuit’s
decision, and reflects the legal
interpretation of section 304 that the
Fifth Circuit would apply. We are
replacing the rule that the court struck
down with this rule for the time period
that the invalidated provisions covered,
so as to avoid having a gap and
consequent ambiguity in the rule
between April 24, 1996, and the date of
this rule.
A Regulatory Flexibility Analysis is
not required because there are no legal
alternatives to the court’s decision that
deemed our current regulations to be
inconsistent with the statute, as cited in
the preamble, other than to publish this
rule. We have determined that the
proposed rule will not have a significant
economic effect on a substantial number
of small entities. A Small Entity
Compliance Guide is not required.
This change would affect lessees and
operators of deepwater leases in the
OCS. This includes about 40 different
companies. These companies are
generally classified under the North
American Industry Classification
System (NAICS) Code 211111, which
includes companies that extract crude
petroleum and natural gas. For this
NAICS code classification, a small
company is one with fewer than 500
employees. Based on these criteria, only
10 of these companies are considered
small. This proposed rule, therefore,
would not affect a substantial number of
small entities.
Your comments are important. The
Small Business and Agriculture
Regulatory Enforcement Ombudsman
and 10 Regional Fairness Boards were
established to receive comments from
small businesses about Federal agency
enforcement actions. The Ombudsman
will annually evaluate the enforcement
activities and rate each agency’s
responsiveness to small business. If you
wish to comment on the actions of
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MMS, call 1–888–734–3247. You may
comment to the Small Business
Administration without fear of
retaliation. Disciplinary action for
retaliation by an MMS employee may
include suspension or termination from
employment with the DOI.
Small Business Regulatory Enforcement
Fairness Act
This proposed rule is a major rule
under 5 U.S.C. 804(2) of the Small
Business Regulatory Enforcement
Fairness Act. This proposed rule:
a. Would have an annual effect on the
economy of $100 million or more, based
on the analysis presented in the
previous section. Current MMS
estimates indicate the royalty costs of
the rule, occasioned by the court ruling,
will be from $3.1 billion to $10.3
billion, based on applicable production
amounts during the 35-year period from
2000 through 2034. This low case dollar
amount represents the added royalty
losses to the Federal government only
on deepwater leases issued without
price thresholds, i.e., in 1998 and 1999.
The high case estimate represents
royalty losses on all DWRRA leases, and
assumes MMS cannot condition royalty
relief on market prices for oil and gas.
Note that it is likely that all of the future
production associated with this added
royalty cost would have occurred even
without the royalty relief offered in the
Act. The decisions to develop at least
some of the fields responsible for this
production occurred under incentive
terms in effect before the Santa Fe
Snyder judgment. Moreover, oil and gas
prices have been and are expected to be
much higher than anticipated by the
Act’s authors.
b. Would not cause a major increase
in costs or prices for consumers,
individual industries, Federal, State, or
local government agencies, or
geographic regions.
c. Would not have significant adverse
effects on competition, employment,
investment, productivity, innovation, or
the ability of U.S.-based enterprises to
compete with foreign-based enterprises.
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Unfunded Mandates Reform Act
This proposed rule would not impose
an unfunded mandate on State, local, or
tribal governments or the private sector
of more than $100 million per year. The
proposed rule would not have a
significant or unique effect on State,
local, or tribal governments or the
private sector. A statement containing
the information required by the
Unfunded Mandates Reform Act (2
U.S.C. 1531, et seq.) is not required.
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Takings Implication Assessment (E.O.
12630)
Under the criteria in E.O. 12630, this
proposed rule does not have significant
takings implications. The proposed rule
is not a governmental action capable of
interference with constitutionally
protected property rights. A takings
implication assessment is not required.
Federalism (E.O. 13132)
Under the criteria in E.O. 13132, this
proposed rule does not have sufficient
federalism implications to warrant the
preparation of a Federalism Assessment.
This proposed rule would not
substantially and directly affect the
relationship between the Federal and
State governments. To the extent that
State and local governments have a role
in OCS activities, this proposed rule
would not affect that role. A Federalism
Assessment is not required.
Civil Justice Reform (E.O. 12988)
This rule complies with the
requirements of E.O. 12988.
Specifically, this rule:
(a) Meets the criteria of section 3(a)
requiring that all regulations be
reviewed to eliminate errors and
ambiguity and be written to minimize
litigation; and
(b) Meets the criteria of section 3(b)(2)
requiring that all regulations be written
in clear language and contain clear legal
standards.
Consultation With Indian Tribes (E.O.
13175)
Under the criteria in E.O. 13175, we
have evaluated this proposed rule and
determined that it has no potential
effects on federally recognized Indian
tribes. There are no Indian or tribal
lands in the OCS.
Paperwork Reduction Act
This rulemaking does not contain any
information collection subject to the
PRA, and does not require a submittal
to OMB for review and approval under
section 3507(d) of the PRA. The one
remaining requirement in Part 260
(§ 260.124(a)(l)) is exempt from the PRA
under 5 CFR 1320.4(a)(2), (c).
An information letter was sent to all
lessees of deep water leases on August
8, 2005, and DOI informed the lessees
that it would apply the court’s decision.
It was neither necessary nor appropriate
for the Department to collect
information used only for purposes of
applying the regulatory provisions that
the court held invalid.
National Environmental Policy Act
This rule does not constitute a major
Federal action significantly affecting the
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quality of the human environment. The
MMS has analyzed this rule under the
criteria of the National Environmental
Policy Act and 516 Departmental
Manual 6, Appendix 10.4C(1). The
MMS completed a Categorical Exclusion
Review for this action and concluded
that ‘‘the rulemaking does not represent
an exception to the established criteria
for categorical exclusion; therefore,
preparation of an environmental
analysis or environmental impact
statement will not be required.’’
Data Quality Act
In developing this rule we did not
conduct or use a study, experiment, or
survey requiring peer review under the
Data Quality Act (Pub. L. 106–554).
Effects on the Energy Supply (E.O.
13211)
This rule is not a significant energy
action under the definition in E.O.
13211. A Statement of Energy Effects is
not required.
Clarity of This Regulation
We are required by E.O. 12866, E.O.
12988, and by the Presidential
Memorandum of June 1, 1998, to write
all rules in plain language. This means
that each rule we publish must:
(a) Be logically organized;
(b) Use the active voice to address
readers directly;
(c) Use clear language rather than
jargon;
(d) Be divided into short sections and
sentences; and
(e) Use lists and tables wherever
possible.
If you feel that we have not met these
requirements, send us comments by one
of the methods listed in the ADDRESSES
section. To better help us revise the
rule, your comments should be as
specific as possible. For example, you
should tell us the numbers of the
sections or paragraphs that you find
unclear, which sections or sentences are
too long, the sections where you feel
lists or tables would be useful, etc.
List of Subjects
30 CFR Part 203
Continental shelf, Government
contracts, Indians—lands, Mineral
royalties, Oil and gas exploration,
Public lands—mineral resources,
Sulphur.
30 CFR Part 260
Continental shelf, Government
contracts, Mineral royalties, Oil and gas
exploration, Public lands—mineral
resources, Reporting and recordkeeping
requirements.
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Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Proposed Rules
seq.; 43 U.S.C. 1331, et seq.; and 43 U.S.C.
1801, et seq.
Dated: August 3, 2007.
C. Stephen Allred,
Assistant Secretary—Land and Minerals
Management.
2. Section 203.69(c) is revised to read
as follows:
For the reasons stated in the
preamble, the Minerals Management
Service (MMS) proposes to amend 30
CFR parts 203 and 260 as follows:
§ 203.69 If my application is approved,
what royalty relief will I receive?
*
PART 203—RELIEF OR REDUCTION IN
ROYALTY RATES
1. The authority citation for part 203
continues to read as follows:
Authority: 25 U.S.C. 396, et seq.; 25 U.S.C.
396a, et seq.; 25 U.S.C. 2101, et seq.; 30
U.S.C. 181, et seq.; 30 U.S.C. 351, et seq.; 30
U.S.C. 1001, et seq.; 30 U.S.C. 1701, et seq.;
31 U.S.C. 9701, et seq.; 43 U.S.C. 1301, et
*
*
*
*
(c) If your application includes preAct leases in different categories of
water depth, we apply the minimum
royalty suspension volume for the
deepest such lease then assigned to the
field. We base the water depth and
makeup of a field on the water-depth
delineations in the ‘‘Lease Terms and
Economic Conditions’’ map and the
‘‘Fields Directory’’ documents and
updates in effect at the time your
application is deemed complete. These
publications are available from the
MMS GOM Regional Office.
*
*
*
*
*
3. Section 203.71 is amended as set
forth below:
A. Revise paragraphs (a)(1), (3), and
(5).
B. Remove paragraph (b).
C. Redesignate paragraphs (c) and (d)
as paragraphs (b) and (c).
The revisions read as follows:
§ 203.71 How does MMS allocate a field’s
suspension volume between my lease and
other leases on my field?
*
*
*
(a) * * *
*
*
If * * *
Then * * *
And * * *
(1) We assign an eligible lease
to your authorized field after
we approve relief
We will not change your authorized field’s royalty suspension volume determined under
§ 203.69
Production from the assigned eligible lease(s) counts toward
the royalty suspension volume for the authorized field, but
the eligible lease will not share any remaining royalty suspension volume for the authorized field after the eligible
lease has produced the volume applicable under § 260.114
of this chapter.
*
*
(3) We assign another lease
that you operate to your field
while we are evaluating your
application
*
*
In our evaluation of your authorized field, we
will take into account the value of any royalty relief the added lease already has
under § 260.114 or its lease document. If we
find your authorized field still needs additional royalty suspension volume, that volume will be at least the combined royalty
suspension volume to which all added
leases on the field are entitled, or the minimum suspension volume of the authorized
field, whichever is greater
*
*
*
(i) You toll the time period for evaluation until you modify your
application to be consistent with the new field; (ii) We have
an additional 60 days to review the new information; and
(iii) The assigned pre-act lease or royalty suspension lease
shares the royalty suspension we grant to the new field. An
eligible lease does not share the royalty suspension we
grant to the new field. If you do not agree to toll, we will
have to reject your application due to incomplete information. Production from an assigned eligible lease counts toward the royalty suspension volume that we grant under
§ 203.69 for your authorized field, but you will not owe royalty on production from the eligible lease until it has produced the volume applicable under § 260.114 of this chapter.
*
*
(5) We reassign a well on a
pre-Act, eligible, or royalty
suspension lease to another
field
*
*
The past production from the well counts toward the royalty suspension volume that we
grant under § 203.69 to the authorized field
to which we assigned the well
*
*
*
The past production for that well will not count toward any
royalty suspension volume that we grant under § 203.69 to
the authorized field from which we reassigned it. But, if the
well is on an eligible lease or royalty suspension lease, production from that well will count toward the volume applicable under § 260.114 or § 260.124 of this chapter.
*
*
*
*
Reduction Act of 1995 under 5 CFR
1320.4(a)(2), (c).
6. Section 260.113 is revised to read
as follows:
*
PART 260—OUTER CONTINENTAL
SHELF OIL AND GAS LEASING
4. The authority citation for part 260
continues to read as follows:
pwalker on PROD1PC71 with PROPOSALS
Authority: 43 U.S.C. 1331, et seq.
5. Section 260.3 is revised to read as
follows:
§ 260.3 What is MMS’s authority to collect
information?
The information collected under 30
CFR 260 is exempt from the Paperwork
VerDate Aug<31>2005
17:13 Dec 20, 2007
Jkt 214001
§ 260.113 When does an eligible lease
qualify for a royalty suspension volume?
(a) Your eligible lease will receive a
royalty suspension volume as specified
in the Act. The bidding system in
§ 260.110(g) applies.
(b) Your eligible lease may receive a
royalty suspension volume only if your
entire lease is west of 87 degrees, 30
minutes West longitude.
PO 00000
Frm 00025
Fmt 4702
Sfmt 4702
7. Section 260.114 is revised to read
as follows:
§ 260.114 How does MMS assign and
monitor royalty suspension volumes for
eligible leases?
(a) We have specified the water depth
for each eligible lease in the final Notice
of OCS Lease Sale. Our determination of
water depth for each lease became final
when we issued the lease.
(b) We have specified in the Notice of
OCS Lease Sale the royalty suspension
volume applicable to each water depth.
The following table shows the royalty
suspension volumes for each eligible
E:\FR\FM\21DEP1.SGM
21DEP1
Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Proposed Rules
72657
lease in million barrels of oil equivalent
(MMBOE):
Minimum royalty suspension volume
(MMBOE)
Water depth
(1) 200 to less than 400 meters ..........................................................................................................................................
(2) 400 to less than 800 meters ..........................................................................................................................................
(3) 800 meters or more .......................................................................................................................................................
8. Section 260.117 is removed.
9. The title of § 260.124 and the
introductory language of paragraph (b)
are revised to read as follows:
required analyses is requested and made
available, and provide for expedited
review of permit applications where
possible.
§ 260.124 How will royalty suspension
apply if MMS assigns a lease issued in a
sale held after November 2000 to a field that
has a pre-Act lease?
DATES:
*
*
*
*
*
(b) If we establish a royalty
suspension volume for a field as a result
of an approved application for royalty
relief submitted for a pre-Act lease
under part 203 of this chapter, then:
*
*
*
*
*
[FR Doc. 07–6161 Filed 12–20–07; 8:45 am]
BILLING CODE 4310–MR–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 600
[Docket No. 071121736–7619–01]
RIN 0648–AR78
Magnuson-Stevens Act Provisions;
Experimental Permitting Process,
Exempted Fishing Permits, and
Scientific Research Activity
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Proposed rule; request for
comments.
pwalker on PROD1PC71 with PROPOSALS
AGENCY:
SUMMARY: NMFS proposes new and
revised definitions for certain regulatory
terms, and procedural and technical
changes to the regulations addressing
scientific research activities, exempted
fishing, and exempted educational
activities under the Magnuson-Stevens
Fishery Conservation and Management
Act. This action is necessary to provide
better administration of these activities
and to revise the regulations consistent
with the Magnuson-Stevens Fishery
Conservation and Management
Reauthorization Act (MSRA). NMFS
intends to clarify the regulations, ensure
necessary information to complete
VerDate Aug<31>2005
17:13 Dec 20, 2007
Jkt 214001
Comments must be received by
March 20, 2008.
You may submit comments,
identified by RIN 0648–AR78, by any
one of the following methods:
• Electronic Submissions: Submit all
electronic public comments via the
Federal eRulemaking Portal https://
www.regulations.gov
• Fax: 301–713–1193, Attn: Jason
Blackburn
• Mail: Alan Risenhoover, Director,
Office of Sustainable Fisheries, 1315
East-West Highway, SSMC3, Silver
Spring, MD 20910, Attn: EFP Comments
Instructions: All comments received
are a part of the public record and will
generally be posted to https://
www.regulations.gov without change.
All Personal Identifying Information (for
example, name, address, etc.)
voluntarily submitted by the commenter
may be publicly accessible. Do not
submit Confidential Business
Information or otherwise sensitive or
protected information.
NMFS will accept anonymous
comments. Attachments to electronic
comments will be accepted in Microsoft
Word, Excel, WordPerfect, or Adobe
PDF file formats only.
Send comments on collection-ofinformation requirements to the same
address and to the Office of Information
and Regulatory Affairs, Office of
Management and Budget, Washington,
D.C. 20503 (Attn: NOAA Desk Officer),
or email to
DavidlRostker@omb.eop.gov, or fax to
(202) 395–7285.
Copies of the categorical exclusion
(CE) prepared for this action are
available from NMFS at the above
address or by calling the Office of
Sustainable Fisheries, NMFS, at 301–
713–2341.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Jason Blackburn at 301–713–2341, or by
e-mail at jason.blackburn@noaa.gov.
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00026
Fmt 4702
Sfmt 4702
17.5
52.5
87.5
Background and Need for Action
On May 28, 1996, NMFS established
procedures pertaining to scientific
research, exempted fishing, and
exempted educational activities (61 FR
26435). These procedures were
established to provide minimum
standards for dealing with scientific
research, exempted fishing and
exempted educational activities under
the Magnuson-Stevens Act. These
standards clarified the requirements for
those managing and enforcing the
fishery regulations, and for the public.
These regulations were subsequently
codified in 50 CFR part 600 (61 FR
32538, June 24, 1996). Shortly
thereafter, the Magnuson-Stevens Act
was amended by the Sustainable
Fisheries Act, which included
important provisions dealing with
essential fish habitat (EFH), rebuilding
of overfished fisheries, and the
requirement to minimize bycatch and
bycatch mortality to the extent
practicable. These new requirements
resulted in an increased interest in
fisheries research.
On January 12, 2007, the MSRA was
enacted. Section 204 of the MSRA
added a new Cooperative Research and
Management Program section (Section
318) to the MSA. Section 318(d) of the
revised MSA requires that the Secretary,
through NMFS, ‘‘promulgate regulations
that create an expedited, uniform, and
regionally-based process to promote
issuance, where practicable, of
experimental fishing permits.’’
A major reason for the expansion in
fisheries research has been the need to
minimize bycatch and the mortality of
bycatch as required under National
Standard 9 of the Magnuson-Stevens
Act. Much of this effort has been
concentrated on studies investigating
fish behavior and the development and
testing of new gear technology and
fishing techniques to minimize bycatch
and promote the efficient harvest of
target species.
Over the years, many questions have
arisen regarding the differences between
a scientific research activity and fishing
and how NMFS interprets each type of
activity under the implementing
regulations. The existing regulations
E:\FR\FM\21DEP1.SGM
21DEP1
]]>Agencies
[Federal Register Volume 72, Number 245 (Friday, December 21, 2007)]
[Proposed Rules]
[Pages 72652-72657]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-6161]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Parts 203 and 260
RIN 1010-AD29
[Docket ID: MMS-2007-OMM-0074]
Royalty Relief for Deepwater Outer Continental Shelf (OCS) Oil
and Gas Leases--Conforming Regulations to Court Decision
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would amend 30 CFR parts 260 and 203 to
conform the regulations to the decision of the United States Court of
Appeals for the Fifth Circuit in Santa Fe Snyder Corp., et al. v.
Norton (the Decision). That decision found that certain provisions of
the MMS regulations interpreting section 304 of the Deep Water Royalty
Relief Act are contrary to the requirements of the statute.
DATES: Submit comments by February 19, 2008. The MMS may not fully
consider comments received after this date.
ADDRESSES: You may submit comments on the proposed rulemaking by any of
the following methods. Please use the Regulation Identifier Number
(RIN) 1010-AD29 as an identifier in your message. See also Public
Availability of Comments under Procedural Matters.
Federal eRulemaking Portal: https://www.regulations.gov.
Select ``Minerals Management Service'' from the agency drop-down menu,
then click ``submit.'' In the Docket ID column, select MMS-2007-OMM-
0074 to submit public comments and to view supporting and related
materials available for this rulemaking. Information on using
Regulations.gov, including instructions for accessing documents,
submitting comments, and viewing the docket after the close of the
comment period, is available through the site's ``User Tips'' link. The
MMS will post all comments.
Mail or hand-carry comments to the Department of the
Interior; Minerals Management Service; Attention: Regulations and
Standards Branch (RSB); 381 Elden Street, MS-4024; Herndon, Virginia
20170-4817. Please reference ``Royalty Relief for Deepwater OCS Oil and
Gas Leases--Conforming Regulations to Court Decision, 1010-AD29'' in
your comments and include your name and return address.
FOR FURTHER INFORMATION CONTACT: Marshall Rose, Chief, Economics
Division, at (703) 787-1536.
SUPPLEMENTARY INFORMATION:
Background
On November 28, 1995, President Clinton signed Public Law 104-58,
which included the Deep Water Royalty Relief Act (Act). The Act was
designed to encourage development of new supplies of energy. It
included incentives to promote investment in a particularly high-cost,
high-risk area, the deep waters of the Gulf of Mexico. These deep Gulf
of Mexico waters were viewed as having potential for large oil and gas
discoveries, but technological advances and multi-billion dollar
investments would be needed to realize that potential. Since the
enactment of the incentive, the deep waters of the Gulf of Mexico have
become one of the most important sources of domestic oil and gas
production.
The Secretary was required to suspend royalties for certain volumes
of production on all leases in more than 200 meters of water in the
central and western Gulf of Mexico issued in the first 5 years
following enactment of the Act. These royalty suspension volumes (RSVs)
(i.e., specified volumes of royalty-free production) ranged from 17.5
million to 87.5 million barrels of oil equivalent, depending on water
depth. The royalty suspension incentive
[[Page 72653]]
was intended to provide companies that undertook these investments
specific volumes of royalty-free production to help recover a portion
of their capital costs before starting to pay royalties. Once the
specified volume has been produced, royalties become due on all
additional production. This was not a matter of agency discretion.
We published an advance notice of proposed rulemaking (ANPR) in the
Federal Register on February 23, 1996 (61 FR 6958), and informed the
public of our intent to develop comprehensive regulations implementing
the Act. The ANPR sought comments and recommendations to assist us in
that process. We continued to collect comments and conducted a public
meeting in New Orleans on March 12-13, 1996, about the matters the ANPR
addressed. We published an interim rule on March 25, 1996 (effective 30
days later). We invited comments on the interim rule, and stated that
we would consider them as part of our review of responses to the ANPR
mentioned above. We further stated that based on comments received and
experience gained, we may include changes to the matters the interim
rule addresses in a comprehensive rulemaking implementing the Act.
Section 304 of the Act specifies RSVs for offshore oil and gas
leases in three defined water depth ranges deeper than 200 meters of
water issued in lease sales held in the first 5 years after the Act's
enactment on November 28, 1995. We stated in our March 25, 1996,
interim rule entitled Deepwater Royalty Relief for New Leases that
``[s]ection 304 of the Act does not provide specific guidance on how to
apply the royalty suspension volumes to leases issued during sales
after November 28, 1995'' and that ``[t]he primary question is how to
apply the minimum royalty suspension volumes laid out in the statute''
(61 FR 12023). We published a final rule implementing section 304 of
the Act in the Federal Register, with no substantive change in the
regulatory language, on January 16, 1998 (63 FR 2626), that became
effective on February 17, 1998.
On October 4, 2004, the U.S. Court of Appeals for the Fifth Circuit
in Santa Fe Snyder Corp., et al. v. Norton, 385 F.3d 884, agreed with
the conclusion of the U.S. District Court for the Western District of
Louisiana that the regulations implementing royalty relief under
section 304 are inconsistent with the statute. The regulations provided
that leases issued under section 304 that are assigned to a field with
a current lease that produced before November 28, 1995, are not
eligible for royalty relief. The regulations further provided that
where there is more than one section 304 lease in a field, leases share
in the statutory RSV. These requirements were promulgated in the
interim rule effective on April 24, 1996 (61 FR 12022).
The effect of the court's ruling in Santa Fe Snyder was that: (1)
The MMS could not condition royalty relief under section 304 on the
lease being part of a field that was not producing before November 28,
1995; and (2) the RSVs prescribed in section 304 apply to each lease,
not jointly to all leases in a particular field. An information to
lessees (ITL) dated August 8, 2005, alerted affected lessees that we
would respect the decision and revise the regulations to conform to
this decision, resulting in this proposed rule.
Regulatory Change
This proposed rule would revise 30 CFR part 260, which pertains to
OCS leasing, and 30 CFR part 203, which pertains to royalty relief, to
treat leases issued under section 304 (referred to in our regulations
as ``eligible leases'') in a manner consistent with the Santa Fe Snyder
ruling. These proposed revisions conform our regulations to the court
ruling and are non-discretionary. The revisions to the regulations in
part 260 would modify Sec. 260.3 relating to MMS's authority to
collect information and remove references in Sec. 260.113(a) to prior
production on the field to which a lease is assigned. Deletions in
Sec. 260.114 would remove paragraphs on procedures for notification,
determination of RSVs, and having more than one RSV on a lease because
they would no longer be required. Section 260.114(b) would also be
revised to change the reference to ``fields'' to a reference to ``each
eligible lease.'' Section 260.124 would be revised to remove a
reference to eligible leases establishing an RSV for a field, which is
not valid under section 304 of the Act, as interpreted in Santa Fe
Snyder. Thus, royalty-free production from an RS lease only counts
against the royalty suspension volume of a field if that volume was
established as a result of an approved application for royalty relief
for a pre-Act lease under part 203. Finally, all of Sec. 260.117 would
be eliminated, because provisions for allocation of royalty suspension
volumes among multiple leases on a field would no longer be needed.
Changes in 30 CFR part 203 would delete references to ``eligible
leases'' in Sec. 203.69 and would change the sharing rule in Sec.
203.71 for purposes of consistency. It would remove the eligible leases
from the section that discusses how to allocate RSVs on a field. Those
changes mean that regardless of the outcome of an application for
royalty relief for leases issued either before or after the 5-year
period covered by section 304, which may affect the field to which they
are assigned, both eligible leases and leases issued in sales held
after November 25, 2000 (referred to in the regulation as ``Royalty
Suspension'' (RS) leases), would get the full RSVs stated in the lease
instrument. Further, as with an RS lease, production from an eligible
lease would count against any RSVs available to pre-Act leases on a
field to which the eligible lease or RS lease has been assigned.
However, unlike RS leases, lessees of eligible leases may not initiate
an application seeking, or requesting a share in, an additional RSV
granted to an RS lease. This is because there would now be more than
enough financial incentive for any single lease.
Retroactive Effect
As explained above, the need for the change in this proposed rule
arises from the Fifth Circuit's decision. The effect of the Fifth
Circuit's decision was to declare void the relevant regulatory
provisions that the court found to be inconsistent with section 304.
Because section 304 had not changed, the necessary implication is that
the relevant regulations were unlawful from their inception. The Fifth
Circuit decision thus has created a regulatory void between the date on
which the interim rule became effective (April 24, 1996) and the
present. The Fifth Circuit plainly would apply its interpretation of
section 304 for all time periods, not just the period after the
decision. This proposed rule does nothing more than conform the
regulations to the Fifth Circuit's decision, and reflects the legal
interpretation of section 304 that the Fifth Circuit would apply. It is
therefore permissible to replace the rule that the court struck down
with this rule for the time period that the invalidated provisions
covered, so as to avoid having a gap and consequent ambiguity in the
rule between April 24, 1996, and the date of this rule. See, Citizens
to Save Spencer County v. EPA, 600 F.2d 844, 879-880 (DC Cir. 1979);
Beverly Hospital v. Bowen, 872 F.2d 483, 485-486 (DC Cir. 1989).
Therefore, this proposed rule will be effective immediately upon being
published as a final rule with retroactive effect to April 24, 1996.
[[Page 72654]]
Procedural Matters
Public Availability of Comments
Before including your address, phone number, email address, or
other personal identifying information in your comment, you should be
aware that your entire comment--including your personal identifying
information--may be made publicly available at any time. While you can
ask us in your comment to withhold your personal identifying
information from public review, we cannot guarantee that we will be
able to do so.
Regulatory Planning and Review (Executive Order (E.O.) 12866)
This proposed rule is not a significant rule as determined by the
Office of Management and Budget (OMB) and is not subject to review
under E.O. 12866.
(1) This proposed rule would conform the regulations with the Fifth
Circuit's decision. It would have an annual effect on the economy of
$100 million or more.
The Fifth Circuit's decision means that more production on many
section 304 leases will be subject to royalty relief than under current
regulations, resulting in larger fiscal costs to the federal
government. The magnitudes of these fiscal losses (on past and future
royalty collections) would vary significantly depending upon whether
the federal government ultimately prevails (low case) or does not
prevail (high case) in pending litigation over the MMS authority to
condition royalty relief on price thresholds (see Kerr McGee Oil and
Gas Corp. v. Allred Docket No. 2:06 CV 0439). In the low case, only
deepwater leases issued in 1998 and 1999 likely would be affected,
because those leases were not issued with price thresholds, and for the
other DWRRA leases, market prices most likely will exceed threshold
levels, thereby eliminating future royalty relief on these other
deepwater leases. In the high case, all deepwater leases issued
throughout the 1996 to 2000 period would be affected, because deepwater
leases issued in 1996, 1997, and 2000 then would be treated similar to
deepwater leases issued in 1998 and 1999 with respect to price
thresholds.
For section 304 leases placed on fields by MMS that consist of one
or more leases which produced prior to the DWRRA, we projected that
from 2000 through 2024, production of oil and gas could range from 4
million barrels of oil equivalent (BOE) in the low case to 27 million
BOE in the high case. The total royalty losses during this 25-year
period are estimated to range from $16 million in the low case to
almost $205 million in the high case (expressed in current year
dollars). Applying discount rates of 3 and 7 percent to the potential
cash flows, the range of fiscal losses becomes $17-192 million at 3
percent and $20-189 million at 7 percent (the lower bound figures
increase as the discount rate rises because all of the losses in this
case, associated with leases issued in 1998 and 1999, represent
historical royalties that must be paid back to the lessees).
The Fifth Circuit Court's ruling also means that the suspension
volumes cited in the DWRRA must apply to each lease, not shared by all
leases on a geologic field, as MMS interpreted the Act. Thus, the added
production from a field that could be eligible for royalty relief
consists of production from all the leases on the field in excess of
the single royalty suspension volume cited in the Act (for the
applicable water depth), up to an amount equal to that suspension
volume times the number of leases included in the field. In fact, the
vast majority of the royalty losses from section 304 leases will occur
as a result of this aspect of the court's ruling. We estimate the
additional production that will be subject to royalty relief from this
``lease-based'' court interpretation will be about 400 million BOE in
the 20-year period from 2007 through 2026 in the low case (covering
only DWRRA leases issued in 1998 and 1999), and approximately 1.3
billion BOE in the 28-year period from 2007 through 2034 in the high
case (covering all DWRRA leases). The royalty costs associated with
these production levels during the time periods of production are
estimated to be $3 billion in the low case and $10 billion in the high
case (expressed in current year dollars). Discounting at 3 and 7
percent yields ranges of royalty losses of $2.5-7.5 billion at 3
percent and $1.9-5.2 billion at 7 percent.
Thus, almost all of the fiscal costs of the Fifth Circuit Court's
ruling in Santa Fe Snyder can be attributed to the expansion of
designated amounts of royalty relief from geologic fields to individual
leases. The total royalty costs of the court's ruling, spanning the 35-
year period from 2000 through 2034, are estimated to be between $3.1
and $10.3 billion (expressed in current year dollars).
(2) This proposed rule would not create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency
because royalty relief is confined to leasing in Federal offshore
waters that lie outside the coastal jurisdiction of state and other
local agencies. Careful review of the lease sale notices, along with
stringent leasing policies now in force, ensure that the Federal OCS
leasing program, of which royalty relief is only a component, does not
conflict with the work of other Federal agencies.
(3) This proposed rule would not alter the budgetary effects of
entitlements, grants, user fees, or loan programs or the rights or
obligations of their recipients.
(4) This proposed rule would not raise novel legal or policy
issues.
Regulatory Flexibility Act
The Department of the Interior certifies that this proposed rule
would not have a significant economic effect on a substantial number of
small entities under the Regulatory Flexibility Act (5 U.S.C. 601, et
seq.).
This proposed rule conforms the regulations to the Fifth Circuit's
decision, and reflects the legal interpretation of section 304 that the
Fifth Circuit would apply. We are replacing the rule that the court
struck down with this rule for the time period that the invalidated
provisions covered, so as to avoid having a gap and consequent
ambiguity in the rule between April 24, 1996, and the date of this
rule.
A Regulatory Flexibility Analysis is not required because there are
no legal alternatives to the court's decision that deemed our current
regulations to be inconsistent with the statute, as cited in the
preamble, other than to publish this rule. We have determined that the
proposed rule will not have a significant economic effect on a
substantial number of small entities. A Small Entity Compliance Guide
is not required.
This change would affect lessees and operators of deepwater leases
in the OCS. This includes about 40 different companies. These companies
are generally classified under the North American Industry
Classification System (NAICS) Code 211111, which includes companies
that extract crude petroleum and natural gas. For this NAICS code
classification, a small company is one with fewer than 500 employees.
Based on these criteria, only 10 of these companies are considered
small. This proposed rule, therefore, would not affect a substantial
number of small entities.
Your comments are important. The Small Business and Agriculture
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were
established to receive comments from small businesses about Federal
agency enforcement actions. The Ombudsman will annually evaluate the
enforcement activities and rate each agency's responsiveness to small
business. If you wish to comment on the actions of
[[Page 72655]]
MMS, call 1-888-734-3247. You may comment to the Small Business
Administration without fear of retaliation. Disciplinary action for
retaliation by an MMS employee may include suspension or termination
from employment with the DOI.
Small Business Regulatory Enforcement Fairness Act
This proposed rule is a major rule under 5 U.S.C. 804(2) of the
Small Business Regulatory Enforcement Fairness Act. This proposed rule:
a. Would have an annual effect on the economy of $100 million or
more, based on the analysis presented in the previous section. Current
MMS estimates indicate the royalty costs of the rule, occasioned by the
court ruling, will be from $3.1 billion to $10.3 billion, based on
applicable production amounts during the 35-year period from 2000
through 2034. This low case dollar amount represents the added royalty
losses to the Federal government only on deepwater leases issued
without price thresholds, i.e., in 1998 and 1999. The high case
estimate represents royalty losses on all DWRRA leases, and assumes MMS
cannot condition royalty relief on market prices for oil and gas. Note
that it is likely that all of the future production associated with
this added royalty cost would have occurred even without the royalty
relief offered in the Act. The decisions to develop at least some of
the fields responsible for this production occurred under incentive
terms in effect before the Santa Fe Snyder judgment. Moreover, oil and
gas prices have been and are expected to be much higher than
anticipated by the Act's authors.
b. Would not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions.
c. Would not have significant adverse effects on competition,
employment, investment, productivity, innovation, or the ability of
U.S.-based enterprises to compete with foreign-based enterprises.
Unfunded Mandates Reform Act
This proposed rule would not impose an unfunded mandate on State,
local, or tribal governments or the private sector of more than $100
million per year. The proposed rule would not have a significant or
unique effect on State, local, or tribal governments or the private
sector. A statement containing the information required by the Unfunded
Mandates Reform Act (2 U.S.C. 1531, et seq.) is not required.
Takings Implication Assessment (E.O. 12630)
Under the criteria in E.O. 12630, this proposed rule does not have
significant takings implications. The proposed rule is not a
governmental action capable of interference with constitutionally
protected property rights. A takings implication assessment is not
required.
Federalism (E.O. 13132)
Under the criteria in E.O. 13132, this proposed rule does not have
sufficient federalism implications to warrant the preparation of a
Federalism Assessment. This proposed rule would not substantially and
directly affect the relationship between the Federal and State
governments. To the extent that State and local governments have a role
in OCS activities, this proposed rule would not affect that role. A
Federalism Assessment is not required.
Civil Justice Reform (E.O. 12988)
This rule complies with the requirements of E.O. 12988.
Specifically, this rule:
(a) Meets the criteria of section 3(a) requiring that all
regulations be reviewed to eliminate errors and ambiguity and be
written to minimize litigation; and
(b) Meets the criteria of section 3(b)(2) requiring that all
regulations be written in clear language and contain clear legal
standards.
Consultation With Indian Tribes (E.O. 13175)
Under the criteria in E.O. 13175, we have evaluated this proposed
rule and determined that it has no potential effects on federally
recognized Indian tribes. There are no Indian or tribal lands in the
OCS.
Paperwork Reduction Act
This rulemaking does not contain any information collection subject
to the PRA, and does not require a submittal to OMB for review and
approval under section 3507(d) of the PRA. The one remaining
requirement in Part 260 (Sec. 260.124(a)(l)) is exempt from the PRA
under 5 CFR 1320.4(a)(2), (c).
An information letter was sent to all lessees of deep water leases
on August 8, 2005, and DOI informed the lessees that it would apply the
court's decision. It was neither necessary nor appropriate for the
Department to collect information used only for purposes of applying
the regulatory provisions that the court held invalid.
National Environmental Policy Act
This rule does not constitute a major Federal action significantly
affecting the quality of the human environment. The MMS has analyzed
this rule under the criteria of the National Environmental Policy Act
and 516 Departmental Manual 6, Appendix 10.4C(1). The MMS completed a
Categorical Exclusion Review for this action and concluded that ``the
rulemaking does not represent an exception to the established criteria
for categorical exclusion; therefore, preparation of an environmental
analysis or environmental impact statement will not be required.''
Data Quality Act
In developing this rule we did not conduct or use a study,
experiment, or survey requiring peer review under the Data Quality Act
(Pub. L. 106-554).
Effects on the Energy Supply (E.O. 13211)
This rule is not a significant energy action under the definition
in E.O. 13211. A Statement of Energy Effects is not required.
Clarity of This Regulation
We are required by E.O. 12866, E.O. 12988, and by the Presidential
Memorandum of June 1, 1998, to write all rules in plain language. This
means that each rule we publish must:
(a) Be logically organized;
(b) Use the active voice to address readers directly;
(c) Use clear language rather than jargon;
(d) Be divided into short sections and sentences; and
(e) Use lists and tables wherever possible.
If you feel that we have not met these requirements, send us
comments by one of the methods listed in the ADDRESSES section. To
better help us revise the rule, your comments should be as specific as
possible. For example, you should tell us the numbers of the sections
or paragraphs that you find unclear, which sections or sentences are
too long, the sections where you feel lists or tables would be useful,
etc.
List of Subjects
30 CFR Part 203
Continental shelf, Government contracts, Indians--lands, Mineral
royalties, Oil and gas exploration, Public lands--mineral resources,
Sulphur.
30 CFR Part 260
Continental shelf, Government contracts, Mineral royalties, Oil and
gas exploration, Public lands--mineral resources, Reporting and
recordkeeping requirements.
[[Page 72656]]
Dated: August 3, 2007.
C. Stephen Allred,
Assistant Secretary--Land and Minerals Management.
For the reasons stated in the preamble, the Minerals Management
Service (MMS) proposes to amend 30 CFR parts 203 and 260 as follows:
PART 203--RELIEF OR REDUCTION IN ROYALTY RATES
1. The authority citation for part 203 continues to read as
follows:
Authority: 25 U.S.C. 396, et seq.; 25 U.S.C. 396a, et seq.; 25
U.S.C. 2101, et seq.; 30 U.S.C. 181, et seq.; 30 U.S.C. 351, et
seq.; 30 U.S.C. 1001, et seq.; 30 U.S.C. 1701, et seq.; 31 U.S.C.
9701, et seq.; 43 U.S.C. 1301, et seq.; 43 U.S.C. 1331, et seq.; and
43 U.S.C. 1801, et seq.
2. Section 203.69(c) is revised to read as follows:
Sec. 203.69 If my application is approved, what royalty relief will I
receive?
* * * * *
(c) If your application includes pre-Act leases in different
categories of water depth, we apply the minimum royalty suspension
volume for the deepest such lease then assigned to the field. We base
the water depth and makeup of a field on the water-depth delineations
in the ``Lease Terms and Economic Conditions'' map and the ``Fields
Directory'' documents and updates in effect at the time your
application is deemed complete. These publications are available from
the MMS GOM Regional Office.
* * * * *
3. Section 203.71 is amended as set forth below:
A. Revise paragraphs (a)(1), (3), and (5).
B. Remove paragraph (b).
C. Redesignate paragraphs (c) and (d) as paragraphs (b) and (c).
The revisions read as follows:
Sec. 203.71 How does MMS allocate a field's suspension volume between
my lease and other leases on my field?
* * * * *
(a) * * *
------------------------------------------------------------------------
If * * * Then * * * And * * *
------------------------------------------------------------------------
(1) We assign an eligible We will not Production from the
lease to your authorized change your assigned eligible
field after we approve relief authorized lease(s) counts
field's royalty toward the royalty
suspension suspension volume
volume for the authorized
determined under field, but the
Sec. 203.69 eligible lease will
not share any
remaining royalty
suspension volume
for the authorized
field after the
eligible lease has
produced the volume
applicable under
Sec. 260.114 of
this chapter.
* * * * * * *
(3) We assign another lease In our evaluation (i) You toll the time
that you operate to your of your period for
field while we are evaluating authorized evaluation until you
your application field, we will modify your
take into application to be
account the consistent with the
value of any new field; (ii) We
royalty relief have an additional
the added lease 60 days to review
already has the new information;
under Sec. and (iii) The
260.114 or its assigned pre-act
lease document. lease or royalty
If we find your suspension lease
authorized field shares the royalty
still needs suspension we grant
additional to the new field. An
royalty eligible lease does
suspension not share the
volume, that royalty suspension
volume will be we grant to the new
at least the field. If you do not
combined royalty agree to toll, we
suspension will have to reject
volume to which your application due
all added leases to incomplete
on the field are information.
entitled, or the Production from an
minimum assigned eligible
suspension lease counts toward
volume of the the royalty
authorized suspension volume
field, whichever that we grant under
is greater Sec. 203.69 for
your authorized
field, but you will
not owe royalty on
production from the
eligible lease until
it has produced the
volume applicable
under Sec. 260.114
of this chapter.
* * * * * * *
(5) We reassign a well on a The past The past production
pre-Act, eligible, or royalty production from for that well will
suspension lease to another the well counts not count toward any
field toward the royalty suspension
royalty volume that we grant
suspension under Sec. 203.69
volume that we to the authorized
grant under Sec. field from which we
203.69 to the reassigned it. But,
authorized field if the well is on an
to which we eligible lease or
assigned the royalty suspension
well lease, production
from that well will
count toward the
volume applicable
under Sec. 260.114
or Sec. 260.124 of
this chapter.
------------------------------------------------------------------------
* * * * *
PART 260--OUTER CONTINENTAL SHELF OIL AND GAS LEASING
4. The authority citation for part 260 continues to read as
follows:
Authority: 43 U.S.C. 1331, et seq.
5. Section 260.3 is revised to read as follows:
Sec. 260.3 What is MMS's authority to collect information?
The information collected under 30 CFR 260 is exempt from the
Paperwork Reduction Act of 1995 under 5 CFR 1320.4(a)(2), (c).
6. Section 260.113 is revised to read as follows:
Sec. 260.113 When does an eligible lease qualify for a royalty
suspension volume?
(a) Your eligible lease will receive a royalty suspension volume as
specified in the Act. The bidding system in Sec. 260.110(g) applies.
(b) Your eligible lease may receive a royalty suspension volume
only if your entire lease is west of 87 degrees, 30 minutes West
longitude.
7. Section 260.114 is revised to read as follows:
Sec. 260.114 How does MMS assign and monitor royalty suspension
volumes for eligible leases?
(a) We have specified the water depth for each eligible lease in
the final Notice of OCS Lease Sale. Our determination of water depth
for each lease became final when we issued the lease.
(b) We have specified in the Notice of OCS Lease Sale the royalty
suspension volume applicable to each water depth. The following table
shows the royalty suspension volumes for each eligible
[[Page 72657]]
lease in million barrels of oil equivalent (MMBOE):
------------------------------------------------------------------------
Minimum royalty
Water depth suspension volume
(MMBOE)
------------------------------------------------------------------------
(1) 200 to less than 400 meters................ 17.5
(2) 400 to less than 800 meters................ 52.5
(3) 800 meters or more......................... 87.5
------------------------------------------------------------------------
8. Section 260.117 is removed.
9. The title of Sec. 260.124 and the introductory language of
paragraph (b) are revised to read as follows:
Sec. 260.124 How will royalty suspension apply if MMS assigns a lease
issued in a sale held after November 2000 to a field that has a pre-Act
lease?
* * * * *
(b) If we establish a royalty suspension volume for a field as a
result of an approved application for royalty relief submitted for a
pre-Act lease under part 203 of this chapter, then:
* * * * *
[FR Doc. 07-6161 Filed 12-20-07; 8:45 am]
BILLING CODE 4310-MR-P
